ISLAMABAD - Ministry of Finance on Sunday rejected the recently published reports regarding high gross external financing requirements of Pakistan and the risks they pose to sustainability of the external account going forward and said that Pakistan's gross external financing requirements in FY 2018 had been misreported with different media reports putting the figures differently; either between $31 billion and $26 billion or $17 billion and $12 billion.

"Such reports misinterpret external account data and are entirely misleading. First, Pakistan continues to maintain a healthy level of foreign exchange reserves despite pressures. Second, the gross financing need for the year 2018 is not as high as reported in the media," a spokesman of the ministry said in a statement.

He said as per international standards, a country's gross financing need was an aggregate of current account deficit plus debt servicing during the year.

“Based on this internationally recognised accounting standard, Pakistan's gross financing need for 2017- 18 is estimated between $17 and $18 billion (5 to 5.3 % of the GDP). This gross financing need represents current account deficit, medium and long-term amortization and stock of short-term external debt,” the spokesman added.

It is to be noted that in FY 2016-17, Pakistan's gross financing need was Rs17.107 billion i.e. 5.6 percent of the GDP. As such the external gross financing need this year will be less than the last year in terms of percentage of the GDP.

Furthermore, it is clarified that arrangements are in place to meet the gross external financing need of the country. “These arrangements include government official inflows from multilateral and bilateral sources, Sukuk/Euro bonds, privatisation proceeds, foreign direct investment, private capital inflows and commercial financing, if necessary,” he elaborated.

After accounting for these arrangements, the net financing gap that the country faces this year is estimated to be in the range of $2 to $2.5 billion.

The spokesman said data for the first five months of the current financial year revealed a rebounding external sector of the economy. “After remaining in negative territory successively for several years, exports have shown 12 percent growth in the first five months of this year. Remittances have now returned to growth zone after remaining negative last year. FDI registered a phenomenal growth of 57 percent in first five months of this year,” he informed. “More importantly, imports are showing visible deceleration on month-on-month basis. With these multifaceted positive-trends further strengthening in the second half of the current financial year, Pakistan will be able to make up for the external gross financing comfortably while maintaining the foreign exchange reserves at a healthy level,” he argued.

Therefore, any speculation with respect to the foreign exchange reserves of the country and the sustainability of the external account should best be avoided, the spokesman concluded.